In our data-driven world, transaction monitoring becomes more and more important every day. Data thieves are constantly finding new ways to hack transactions and defraud individuals and businesses, so transaction monitoring has to become more and more sophisticated all the time. That’s evident from the way the transaction monitoring market has been growing: According to research from Mordor Intelligence, this industry is expected to expand at a compound annual growth rate of 14.5% between 2021 and 2026


Transaction monitoring is a critically important backup for your transaction processing systems. It’s easy for mistakes to happen and then go unnoticed in busy, data-heavy businesses. A rogue employee might get away with stealing from the company for months. Or a client or customer might complain that their payment card data was stolen and blame it on a transaction they did with you. So today’s business leaders have to be on top of transaction processing best practices, and that starts with answering a very important question. What is transaction processing, exactly? 


What Is Transaction Processing?

In basic terms, transaction processing describes the computing systems that work together to complete transactions. Even a simple transaction, like buying a single apple from the grocery store, could include dozens or even hundreds of smaller transactions. The store’s databases must be updated to reflect the fact that the store now has one fewer apple to sell and has brought in a new dollar. Simultaneously, if you use your credit card, your bank’s databases are also being updated to show that your card balance is now higher by one dollar. So when you swipe your card, many systems are all working at once to do transaction processing and update all necessary databases.


Challenges of Transaction Processing

Some of the common challenges associated with transaction processing include the following:


  • Managing huge quantities of data. Depending on the industry and other factors, a business may complete thousands of transactions in a single day. The more transactions that happen, the greater the likelihood of a problem. 
  • Protecting data security from outside and internal threats (Again, transaction monitoring is key here).
  • Maintaining compliance with Payment Card Industry Data Security Standards and any other regulatory guidance affecting your industry. 
  • Ensuring training of employees. Employees who operate transaction processing systems can still make errors if they’re not well-trained in using those systems. 


How To Optimize Your Transaction Processing

Optimizing your organization’s transaction processing activities can be complicated. That’s especially true because every business has unique transaction processing requirements and systems. That said, there are some key tips that might help. These are a few of the things to keep in mind when analyzing your transaction processing procedures. 


Leverage Technology

In the past, transaction processing systems were all cumbersome and riddled with inaccuracy. Fortunately, there have been a lot of technological developments that eliminate those inaccuracies and make transaction processing much more mainstream. While these systems can be expensive in some cases, it’s almost always worth the cost. Businesses that still do things manually are going to struggle with growth. Secure document sharing can happen online; you don’t have to sacrifice convenience for security.


Create Qualified Operators

You read that correctly. You don’t simply find operators: You need to make sure that you convert those new team members into qualified operators of your transaction processing systems. This is done by setting up transaction processing procedures and then taking the time to train these people so that they are able to operate your system efficiently. As your business scales upward, you will need to bring more people in and repeat your qualification process. Always invest in the success of your business.


Create Structure

The first step is to understand exactly how transaction processing systems are designed to work. Let’s use a grocery store example again here. A customer brings their goods to the cashier, who scans each item. The customer then pays for the goods. To the customer, it seems like a two-step process but there is a lot of stuff happening behind the scenes.


  • Store inventory is updated as each item is scanned.
  • Price is pulled from the database to the register as an item is scanned.
  • Funds are placed on hold in the customer’s account, assuming a card is used for the purchase.
  • Accounting information is updated based on the transaction.
  • All of the above information is then stored in a database.


Your business might have slight differences, but the basics will be the same. What’s important is that you have each step structured, written down and set up in the most efficient way possible.


Set Up the Process

Here are some of the important steps that you must define. Put this in writing:


  • How are you going to collect data? These are known as input devices. For example, retail stores will collect data from inventory pads and registers.
  • How are you going to process the data? You can use batch processing, online processing and hybrid systems. This also involves the manipulation of data into reports and other vital information.
  • How will you store information? Companies used to keep manual records but that’s a bad idea in today’s world. While certain regulations might still require it for certain items, store as much information digitally as possible.
  • How will you pull data from your sources? Paper reports, detailed summaries and exception reports are all three examples of pulling data.


Finally, you need to point out to all members of your team who operate these transaction processing systems that accuracy is important. Include it as part of their training and create standard operating procedures that emphasize accuracy. It always comes down to the individuals operating the system. The more effort you put into their training, the better the system will operate.


Streamline Data Management with CapLinked

Protecting the integrity and security of your data is paramount for organizations of all kinds. Using CapLinked makes it easy to securely share files and manage documents and other kinds of data. Working in a virtual data room creates a central place for everyone on your team (or a select group of people) to access and share data without allowing it to be exposed to outsiders. Business leaders concerned about how to keep data safe in an increasingly risky digital world can’t afford to overlook the protections provided by tools like virtual data rooms. 


Ready to see how CapLinked can make data management easy, secure and user-friendly? Start your free trial today.


Kathryn Walsh is a professional services writer based in Syracuse, NY.




IBM – Transaction processing

Tech Funnel – What is a Transaction Processing System?